Citigroup, on the other hand, has had trouble moving $95 billion of U.S. mortgages off its books through securitization. Shares of the bank have done well lately, jumping 10.5% since third quarter earnings beat expectations earlier this month. The company reported earnings, excluding one-time items, of $1.06 per share on revenue of $19.4 billion. The street had been expecting a gain of just $0.96 per share, 22% lower than in the same quarter last year. Mortgage originations fell 15% while increasing by 29% at J.P. Morgan and surging 56% at Wells Fargo
/quotes/zigman/239557/quotes/nls/wfcWFC

They conclude,

While market pundits have put these two views at loggerheads, they may actually both be right.

If that’s the case, the SeekingAlpha authors offer this trio of shares they expect to perform well in either scenario.

PulteGroup
/quotes/zigman/129784/quotes/nls/phmPHM reports earnings on October 25th with expectations for a gain of $0.20 versus a loss of $0.34 in the same quarter last year. The $6 billion homebuilder easily beat expectations in the second quarter with a gain of $0.11 versus expectations of a $0.05 gain in net income per share… If the company meets expectations for the third quarter, trailing price-to-earnings will still be 21.7 times. Earnings still need to rebound more than 50% to get the shares back to their long-run average valuation of 10 times trailing earnings before the bursting of the housing bubble.

Zillow
/quotes/zigman/5930210/quotes/nls/zZ is a leading real estate listing site with almost 7% of the market, even higher than the National Association of Realtors’ official site and second only to Yahoo (YHOO). Even better, the company has an advertising agreement with Yahoo that collects revenue on visits to both sites. A tiered subscription service allows agents to attract and connect with potential clients, and a “Mortgage Marketplace” application allows lenders to advertise directly to buyers.

Shares of Home Depot
/quotes/zigman/229488/quotes/nls/hdHD have benefited with the rebound and are up 70% over the last twelve months. Even at a trailing price-to-earnings of 21.3 times, the company may be a good investment on a continued rebound in housing. Revenue should be supported as the average age of existing homes increases, needing more repairs, and as construction picks up for new homes. Earnings are not reported until November 13th but are expected to increase 17% to $0.70 from $0.60 per share in the same period last year.

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